The fundamentals are gradually weakening, and the upside of Shanghai aluminum is limited

Last week, London aluminum fluctuated in the 1960-2010 US dollar range, the market expects the Biden administration to increase stimulus measures, optimism boosts aluminum prices to pick up, London aluminum climbed to the highest 2006.
5 US dollars, from the trend point of view, lack of favorable boost, aluminum price increase is limited, short-term material shock pattern is difficult to change
.

In terms of market transactions, approaching the Spring Festival, downstream enterprises are gradually on holiday, some have stopped work, dragging down market demand, traders are also less motivated to enter the market, the supply of goods is more abundant, and the transaction is mostly reflected in the preparation of Spring Festival inventory by enterprises that have not yet stopped work
.
Volume is expected to decline
next week.

On the supply side, the domestic electrolytic aluminum production capacity reached 39.
3 million tons at the end of 2020.

Domestic production in January is expected to reach 3.
3 million mt, up 8%
year-on-year.
In terms of imports, the import profit window opened sharply in November, imported goods arrived at Hong Kong from mid-to-late December, customs declaration inflows rose significantly in January, and supply margin increased
.

On the demand side, the operating rate of all processing sectors has declined, and the progress towards the Spring Festival has become more and more obvious
with time.

In terms of inventory, domestic aluminum ingot social stocks decreased by 15,000 tons month-on-month to 669,000 tons, and transportation hindered the recovery of inventories, but they will eventually be cashed
in.

Fundamentally, domestic output rose 8% year-on-year to 3.
3 million mt in January, while imports were still flowing in January, there was seasonal weakening pressure on consumption, and spot inventories were accumulating
.
It is worth noting that logistics affects short-term arrivals, interrupts the accumulation process, and triggers a rebound in Shanghai and aluminum with a rebound target of 15200
.
Overall, aluminum inventories are still at a relatively low level, and overseas orders are still picking up month-on-month, and aluminum prices are expected to have strong
support below under good consumption expectations.